According to the World Trade Organization (WTO) Goods Trade Barometer, the current reading of 110.4 is the highest on record since the indicator was first released in July 2016, and up more than 20 points year-on-year.

This reflects both the strength of current trade expansion and the depth of the pandemic-induced shock in 2020. However, while still well above trend, the index has started to rise at a decreasing rate, which could presage a peaking of upward momentum in trade.

All of the barometer’s component indices were above trend in the latest month, illustrating the broad-based nature of the recovery. Indices for air freight (114.0), container shipping (110.8) and raw materials (104.7) in particular continued to rise, signalling faster than average trade growth.

The latest barometer reading is broadly consistent with the WTO’s most recent trade forecast of 31 March, which foresaw an 8% increase in the volume of world merchandise trade in 2021 following a 5.3% drop in 2020.

Global goods trade has grown steadily since it registered a sharp decline in the second quarter of 2020 during the early days of the pandemic. The volume of merchandise trade was up 5.7% year-on-year in the first quarter of 2021, the largest jump since the 5.8% rise in third quarter of 2011. The latest barometer reading suggests that goods trade will see an even larger year-on-year increase in the second quarter once trade volume data for that period are available.

The outlook for world trade continues to be overshadowed by downside risks, including regional disparities, continued weakness in services trade, and lagging vaccination timetables, particularly in poor countries. Covid-19 continues to pose the greatest threat to the outlook for trade, as new waves of infection could easily undermine the recovery.

By Just Style